Pear Orchards is evaluating a new project that will require equipment of $225,000. The equipment will be depreciated on a 5-year MACRS schedule The annual depreciation percentages are 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent, respectively. The company plans to shut down the project after 4 years. At that time, the equipment could be sold for $51,500. However, the company plans to keep the equipment for a different project in another state. The tax rate is 21 percent. What aftertax salvage value should the company use when evaluating the current project? Multiple Choice $38,880 $51,500 $0 $48.850
Pear Orchards is evaluating a new project that will require equipment of $225,000. The equipment will be depreciated on a 5-year MACRS schedule The annual depreciation percentages are 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent, respectively. The company plans to shut down the project after 4 years. At that time, the equipment could be sold for $51,500. However, the company plans to keep the equipment for a different project in another state. The tax rate is 21 percent. What aftertax salvage value should the company use when evaluating the current project? Multiple Choice $38,880 $51,500 $0 $48.850
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Pear Orchards is evaluating a new project that will require equipment of $225,000. The equipment will be depreciated on a 5-year MACRS schedule.
The annual depreciation percentages are 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent, respectively. The company
plans to shut down the project after 4 years. At that time, the equipment could be sold for $51,500. However, the company plans to keep the
equipment for a different project in another state. The tax rate is 21 percent. What aftertax salvage value should the company use when evaluating the
current project?
Multiple Choice
$38,880
$51,500
$0
$48.850
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